Florida Retirement System for cops, fire could cost Jax taxpayers an additional $19M a year

Jacksonville Mayor Donna Deegan is offering cost protections on her proposal to offer police and fire employees pensions via the Florida Retirement System (FRS) starting in Fiscal Year 2028.

Costs for adding 1,835 members of the Jacksonville Association of Fire Fighters and the local Fraternal Order of Police (FOP) unions could amount to more than $19.25 million a year in future budgets, in the unlikely event that everyone currently employed at the time opts to go with FRS rather than today’s 401(k)-like plan.

If the 775 correctional employees are thrown into the mix, $26.5 million would be the recurrent impact annually compared to the status quo, according to a memo the administration prepared for the Jacksonville City Council.

Jail workers’ inclusion would require a change in state law governing the “special risk employee population,” given that as of now, correctional employees could only join FRS if all city employees were given the same option. Such a change could happen in the 2025 or 2026 Legislative Sessions, permitting their inclusion.

However, the administration does not expect full FRS participation. Instead, a rate of “around 50%” is expected, “based on an understanding of recruitment demographics (i.e. younger employees leaning towards a defined contribution plan and older employees leaning towards a defined benefit), an analysis of modeled scenarios, and very preliminary discussions between the unions and their membership.”

If only half of employees sign on, the numbers are less daunting: just over $9.63 million without correctional employees, and nearly $13.27 million if they are included.

Those elections in 2027 will include three options for workers employed at that point, with new hires from that date going automatically in FRS.

The first would be the “Jacksonville Public Safety DC Plan,” a 10% employee-25% employer split with no Social Security.

The FRS Special Risk Defined Benefit Plan includes a 3% employee, 35.79% employer contribution split, where both employee and employer pay 6.2% into Social Security as well.

Finally, the FRS Special Risk DC Plan includes a 3% employee, 16% employer split, with both paying 6.2% into Social Security.

Defined benefit pensions were eliminated for new hires as of 2017, a condition of pension reform legislation in Jacksonville and Tallahassee.

The measures authorized a successful referendum dedicating a current half-cent sales tax to defraying legacy pension debt once its current purpose of paying down Better Jacksonville Plan obligations is fulfilled by the end of 2030.

The memo sent to City Council points out that the promise of stable retirement plans have already helped with employee attrition created by the current plan.

Applications to JSO are “up 88% in July 2024 after the collective bargaining agreement was finalized” with the FOP.